Asia in the 21st Century: Strategic Realignments amidst a Changing Balance of Power

Based on a paper presented to the Carnegie Council's Global Ethics Fellows Fifth Annual Conference, "An Ethical Dialogue between Asia and the West: Philosophical Traditions, Moral Contentions, and the Future of US-Asia Relations." The Conference took place in New York City, October 20-23, 2015.

The State of Pax-Americana

The West's decades-long dominant global position seems so evident as to require no comment. The magnitude of it becomes apparent from the standard indicators of power, such as Gross Domestic Product (GDP), military spending, technological innovation (as indicated, say, by the number of patents applications filed), and living standards, broadly defined. The United States still remains the leader when it comes to relative size of economies, and by an overwhelming margin. According to World Bank data, America's GDP, the world's largest, was worth $17.4 trillion in 2014.1 China, the putative challenger of for global primacy, was in second place with a GDP of $10.3 trillion, or 41 percent smaller. Japan held third place at $ 4.6 trillion, which meant that the American economy was three times larger. The disparity becomes even starker when one considers the military realm. The United States' 2015 defense budget totaled $577 million; China's, again the world's second largest, was $145 billion; that amounts to a ratio of almost 1:4 in favor of the U.S.2 The same picture—American preeminence—appears, the Economist reveals, if one turns to venture capital investment (the global share of the United States is 70 percent), social media use (60 percent) or spending on research and development (25 percent).3 American foreign policy certainly stirs opposition in many part of the world, but attitudes toward the United States remain positive in several important respects. It continues to have considerable appeal as a destination for emigration, the marks made by its culture and lifestyle are readily apparent (if not always aesthetically pleasing), and the reputation of its universities remains peerless. In short, America still does well in the fuzzier forms of power.

To be sure, the United States does not dominate across the board in power-relevant indices. In fact, its relative position in some of them has declined since the middle of the last century. Thus its relative share in global GDP has fallen from about 20 percent in 2005 to about 18 percent in 2015, whereas it was 30 percent in 1950 and 25 percent in 1970. For decades, technological innovation was an American preserve, and in many ways still is. Yet China now accounts for nearly a third of worldwide patent filings; the United States, with a 22 percent share, occupies second place.4 Furthermore, power has many facets and cannot, in consequence, be applied easily and successfully across differing contexts. Some forms of it matter in some situations (bombers are important in war) but not in others (bombing your interlocutors' countries during trade negotiations tends not to not advance your cause). Economic and military dominance, no matter how impressive, are not panaceas. Finally, advantages that are hard to measure can prove crucial, for instance the role of morale in war. Were GDP and military might consistently decisive, the United States should have won the Vietnam War quickly; instead it lost. The Afghan mujahedeen forced the Soviet army to withdraw: were material power ratios determinative, the Red Army should have won handily and rapidly; instead it fought a gaggle of ragtag guerilla groups for twice as long as it battled Nazi Germany—and lost.

Nevertheless, to the extent that quantifiable indices of power matter, and the historical evidence shows that they do, America's international position bids fair to be unsurpassed for a decade, if not longer, especially if its margin of advantage remains substantial in the three critical manifestations of power: hard (military), economic, and "soft" (cultural). China, though undoubtedly a rising challenger, still faces a steep, long climb and must surmount daunting obstacles along the way, among them an aging population, the dissonance between a dynamic economy and society and an ossified, restrictive political order, severe water shortages, and the ill effects—including economic costs—of pervasive environmental pollution. It will also be forced to move away from a strategy that relies heavily on adding labor (from farms to factories) and capital to achieve high growth rates to one powered by innovations that increase output per composite unit of labor and capital—what economists refer to as "factor productivity." China does not fare well on this particular measure; indeed its factor productivity has dropped from 2.7 percent in 2007–2012 to 0.4 percent in 2012 to 0.1 percent in 2013.5 Prognosticators expect that China's GDP will become the world's largest in a decade or so; but in per capita terms China will be a middle-income country at best. Besides, the other major centers of global economic power, Europe, Japan, and South Korea, are American allies.

China lacks partners with comparable heft, a reality that won't change anytime soon. The Russia-China "strategic partnership" gets considerable coverage, but given the various problems facing Russia—an economy tied to energy prices, a shrinking and aging population, and a public health crisis that is depleting its human capital—it will not serve as an effective partner for China in counterbalancing the United States and its allies. Moreover, Russia does not relish the prospect of becoming Beijing's adjutant in a Pax-Sinica, a sentiment reflected in "Russia Strategy—2020," published by a group of Russian experts in 2012, which rules out a lasting alliance.6 On this score Russia already has cause for concern. China has undercut Russia's strategic position in Central Asia, a region that the Tsarist Empire annexed in the mid-19th century and that the Soviet Union subsequently incorporated. Since 1992, China's economic presence in this zone of historic Russian preponderance has soared (it has replaced Russia as the region's key trade partner) and so has its political influence. In the longer term, a similar change could occur in the Russian Far East. This vast (2.4 million square miles) resource-rich region, remote from Russia's western centers of power, contains only 6.4 million people.7 Adjoining it are three Chinese provinces that alone have a population of over 160 million. Russia understands the vulnerabilities this mix of geography and demography presents. Accordingly, even as Moscow has turned to Chinese investment to develop its eastern flank, it has positioned substantial forces in the Eastern Military District—moving west to east, the 36th Army, the 29th Army, the 35th Army, and the 5th Army—equipped with bombers (Tu-95MS, Tu-22M3, and Su-24M), fighter aircraft (Su-25, MiG-31, Su-27), and multirole aircraft (Su-34, Su-30M, and Su35S multirole fighters), air defense missiles (S-300, S-400, and Tor-M2U), and helicopters. The September 2014 "Vostok" (east) maneuvers in the Eastern Military District were Russia's largest and involved 100,000 troops. Of course, not all of these forces are deployed solely with China in mind; nevertheless, despite the Sino-Russian strategic partnership and the convergence of views on important questions, Russia has been careful to secure its eastern frontier.8

Asia's Resurgence

While the United States, and the West more generally, continue to dominate the current international system, it wasn't always thus. Seen in historical perspective, a Western-dominated world is a recent phenomenon. Not until the 15th century did the gap between the West and the rest start widening dramatically, the Industrial Revolution serving as a critical accelerator. For centuries before that, the centers of cultural splendor, wealth, and scientific and technical accomplishment lay in Asia, in China particularly. Asia accounted for nearly 60 percent of global economic output as recently as 1700. Asia's position declined steadily thereafter, but starting in 1980, it started regaining ground.9 China's steady resurgence, along with other countries in South and East Asia, has been among the most significant changes in the international system since 1980s. To avoid the stale debate over whether Pax-Americana's days are numbered and whether the unipolar world will soon be supplanted by a multipolar one, let me clarify that I have in mind the reemergence of South Asia and the Asia-Pacific as indicated by their growing significance for global output, trade, and investment, not the imminent eclipse of the West. Still, this trend—the shift in Asia's relative standing—will have significant political and military consequences, even if the demise of a Western-centered world order will not, at least for a long time, be among them.

The breakneck pace of Chinese economic growth since the 1978 Deng Xiaoping revolution has eroded the advantage United States has enjoyed in East Asia for more than half a century; and the trend will continue unless China suffers a prolonged economic crisis or deep political upheaval. Given its magnitude, China's economic transformation merits mention here.10 Since 1978, China's annual economic growth has averaged 9 percent, its economy increasing 48-fold in value in consequence. Chinese GDP was $168 billion in 1979, now it's over $10 trillion.11 In 1980, China accounted for only 4 percent of global economic production, the United States for 22 percent; the present proportions are 16.3 percent and 16.1 percent respectively.12 As recently as 2006, the U.S. was the top trade partner for 127 countries, China for 70; by 2012, the figures had flipped: China 124, the U.S. 76.13 By 2013, China had surpassed the U.S. as the world top trading country—with $4.2 trillion (exports plus imports) to America's $3.8 trillion.14 One consequence of this, especially given America's staggering national debt (close to $18 trillion) and persistent budget deficits ($483 billion in 2014) has been that China, which has the world's largest foreign exchange reserves ($3.5 trillion in 2015 despite a slowdown in economic growth since 2014), holds $1.3 trillion in U.S. Treasury notes—8 percent of America's total debt. As noted earlier, America's defense budget dwarfs China's; but the gap is narrowing, albeit slowly. Not only has China's military spending become the world's second largest, it is twice that of Russia's, which ranks number three. And as China's economy becomes larger, Beijing will be better placed to increase the portion devoted to defense without difficulty, if one bears in mind that China's military budget was just 2.1 percent in 2014, compared to 3.5 percent for the United States.15

In the early 1990s, Asia's other giant, India, which is poised to surpass China in population, awoke from a 25-year slumber and soon became one of the world's fastest growing economies. And as the pace of China's economic expansion started to slow in 2014, India pulled even, recording a 7.4 percent growth rate.16 That tempo compared to an average about 2.5 percent for two decades following its independence in 1947, "the Hindu rate of [economic] growth," the economist Raj Krishna called it. India still faces severe problems, including a significant, but falling, percentage of people living in poverty, shopworn infrastructure, and a school system unsuited to the 21st century.17 Yet its economic resources are increasing. One consequence has been the growth of Indian military power. India's defense budget, $38 billion, ranks ninth in the world, and even though it trails those of the United States and China by a massive margin, its armed forces are highly professional and its capacity to project power has grown, albeit slowly.

The reemergence of Asia has more to do, however, than with the trajectory of India and China and can be traced back to the earlier emergence of Japan and South Korea as global economic powers and the success of other states, such as Taiwan and Singapore. The result has been a shift in the global economic center of gravity from west to east, with the latter approaching 30 percent of global GDP in 2015, comparable to the share of the United States after World War II.18

Shifting Alignments

China's emergence as a putative challenger to the United States for global primacy has already produced changes in alignments across Asia. The India transformation of the ties between India and the United States exemplify this. In contrast to the Cold War decades, when the relationship between them was often distant and even frosty at times, in the post-Cold War years Washington and New Delhi have begun to increase their military cooperation steadily, and the U.S. will almost certainly make its mark on the Indian arms market, that the USSR and Russia thereafter virtually monopolized since the mid-1950s. During his visit to India in 2010, President Barack Obama announced that the U.S. would sell $5 billion in armaments to India, and additional opportunities will doubtless arise in view of New Delhi's plan to spend $100 billion on weaponry over the coming decade.19 On another front, Washington has gone from applying economic sanctions on India to punish it for becoming a nuclear power in 1999 to accepting its status as a nuclear power and even, under the 1-2-3 Agreement of 2007, supplying its civilian nuclear sector.20

This contrasts with the U.S.-China relationship, which while strong in the economic sphere, shows signs of stress and tension, certainly in the domain of security. It was not always thus. After the acrimony of the 1950s and 1950s, there followed a period of strategic convergence between Beijing and Washington—created largely by shared concern about the Soviet Union—in the 1970s and 1980s. That has been replaced by a growing strategic competition marked by assertiveness and confidence on China's part, especially notable under President Xi Jinping. Xi's personality counts for much less here than the fact that China's economic and military power has grown to the point that it can force Washington to run bigger risks to defend its Asia-Pacific allies should they find themselves embroiled in conflicts with China.

Another example of changing alignments in Asia produced by China's rise is the U.S.-Vietnam relationship.21 Gone is the enmity of America's Vietnam War years and the acrimonious period—two decades or so—that followed, a time when Washington viewed Hanoi as an antagonist and Moscow's ally to boot. Since President George W. Bush outlined a process for normalizing the relationship, bilateral ties have blossomed. Diplomatic relations were reestablished in 1995. Numerous high-level visits have since been made by American officials: presidents Bill Clinton in 2000 and George W. Bush in 2006; secretaries of state Warren Christopher in 1995, Colin Powell in 2001, Hillary Clinton in 2010 and 2012, and John Kerry in 2015; defense secretaries Donald Rumsfeld in 2006, Leon Panetta in 2012, and Ashton Carter in 2015, and by their Vietnamese counterparts, including the Prime Minister Nguyen Tan Dung (2008) and Communist Party General Secretary Nguyen Phu Truong (2015). In 2008, the U.S. and Vietnam held their first Political, Security, and Defense Dialog between their foreign ministries and in 2010 commenced a Defense Policy Dialog between their defense ministries; both conclaves are to be held annually at the vice-ministerial level. During Secretary of State Clinton's last visit, the two countries discussed a "strategic partnership." Having eased restrictions on the sale of certain categories of non-lethal military equipment to Vietnam in 2007, in 2014 the U.S. government partially lifted the ban on selling lethal weapons, though confining permitted sales to materiel for maritime defense.22 Further evidence of security cooperation between Hanoi and Washington emerged during Defense Secretary Panetta's visit, when the U.S. expressed interest in access to Cam Ran Bay, which, during the Cold War years, gained notoriety in Washington as a Soviet naval base.

China's growing power and assertiveness will produce other new Asian alignments—ones starkly different than those of the Cold War. Among these will be a slow change in the minimalist defense policy of Japan, which, for a generation following World War II, could count comfortably on America's capacity to dominate militarily all Asian powers. Any dramatic change in Japan's national security strategy spurred by China's rise will perforce spark controversy and anxiety within Japan and won't be easy to execute. Indeed, Prime Minister Shinzo Abe's insistence on pushing through legislation that permits Japan to participate in collective self-defense in its neighborhood (in particular defending American forces that come under attack) and perhaps beyond, as opposed to simply self-defense and UN peacekeeping under restrictive conditions, has already provoked opposition from Japan's political class and citizenry.23 Signs of change in Japan's defense policy has produced anxiety in Japan's neighborhood as well—particularly in China and South Korea—because of the legacy of Japanese imperialism in the 1930s and 1940s, made all the more controversial by Tokyo's unwillingness, in stark contrast to Germany, to acknowledge, let alone atone for, past sins. Under these circumstances, Tokyo's challenge will be to strike a balance between, on the one hand, ensuring adequate deterrence for itself and, on the other, providing adequate reassurance for its neighbors while building a domestic consensus that will support a more robust military capacity given the shift in the U.S.-China balance of power. In contrast to much of East Asia, India has welcomed Abe's change of course, and cooperation between India and Japan in defense and intelligence matters has increased substantially. Changes in Japan's strategic posture will be slow in coming but it would be ahistorical to rule them out, if only because they have occurred repeatedly since the Tokugawa era. Nor are Japan's choices limited to minimalism or militarism: there are several variants in between and they are sufficient to reshape Asia strategic environment.

Still other trends point to strategic recalculations in Asia prompted by China's rise. India and the United States began joint naval exercises in 1992, and since 2007 they have expanded into the MALABAR exercises, which include Japan, Australia, India, and the United States. In 2015, India and Australia commenced their own ("AUSINDEX") maritime maneuvers. As part of its Act Asia policy, India has deepened security ties with Vietnam and has begun supplying coastal patrol boats to Hanoi in a move that could inaugurate additional arms sales. India has also sought to bid for a contract to build frigates for the Philippines. In 2005, India signed a strategic partnership with Indonesia and has trained Indonesian pilots to fly Russian-made Sukhoi jets. These Indian moves to expand military sales in Asia have not gone unnoticed in China, especially because they are being supplemented by initiatives.24 Thus the Indian and Indonesian navies now conduct annual naval exercises and patrols, including in the Bay of Bengal and the Malacca Straits.25 Japan has sold India ShinMaywa U-2 naval patrol aircraft and has lobbied hard to sell Australia its Soryu-class submarines, in which India has expressed interest, albeit without a clear result.26 In short, though it is still inchoate, a counter-coalition has begun to emerge in Asia around China's perimeter. The United States will remain a major player in the region but will operate in different ways and with different partners than in the past. The current changes in Washington's political and military relationship with India and Vietnam are the most significant examples of this.

Should China manage to avoid economic crises and major upheavals at home and continue its ascent, India, Australia, Japan, the United States, Vietnam, and Indonesia will find their interests converging. China's challenge will be to continue amassing power while reassuring Asian states that its intentions are benign and that it is not a revisionist power. That has been part of Beijing's strategy, but China will also no doubt try to prevent the counter-coalition from gaining coherence, substance, and institutional strength by reassuring and co-opting its members, using trade and investment and aid, and cutting bilateral deals that address disputes with individual states. China's bilateral trade agreements with various Asian states, its creation of an Asian Infrastructure Bank (AIB), its enthusiasm for the Regional Comprehensive Economic Partnership (launched by ASEAN in 2012), and the loans made to Asian states by China's Export-Import Bank and the China Development Bank (which together lend more to the region than the World Bank and the Asian Development Bank) are examples of Beijing's strategy of combining strategic reassurance with economic cooptation.27 These steps, together with Washington's (largely unsuccessful) efforts to persuade countries to shun the AIB and its creation of the Trans-Pacific Partnership (TPP), which excludes China, show that U.S.-China strategic competition in Asia has an economic as well as a political and military dimension.

China will be hard-pressed to sustain the diplomacy of reassurance and co-optation. It has territorial disputes with several countries in the region and a continuing commitment to reunification with Taiwan. More fundamentally, its growing power could incline it toward confrontation rather than conciliation.28 If so, it will not be the first rising power in history to have fallen into this trap.

Asian countries will not lack for opportunities to benefit from their economic resurgence of their continent, home to three of the world's largest economies. Many of them, China included, have acquired a stake in economic interdependence—finance, trade, and foreign direct investment—substantial enough to raise the costs of military recklessness. And all of them doubtless realize that a regional conflict will have catastrophic consequences, and not just of an economic nature. Still, one cannot assume that Asia's growing wealth and interdependence will necessarily provide a guarantee of stability—that the logic of what Richard Rosecrance called the "trading state" mentality will win out. There is scant historical evidence for such an inference, which verges on economic determinism. States are not motivated by economic calculations alone; they are not bankers or accountants. Pride, fear, hubris, misperception, and an obsession with standing shape what they do and how they do it.29 As Asia's power balances shift there will be plenty of occasions when these non-economic impulses drive policy.

What makes the change in the Sino-American relationship dangerous is that nationalism in China has supplanted a now largely irrelevant Marxism-Maoism as the Chinese state's legitimating ideology.30 That will make it harder for China's leaders to back off during a crisis or even to agree to terms that involve concessions. In China, the genie of nationalism is out of the bottle; a Chinese citizenry, which can communicate and mobilize with unprecedented speed thanks to "social media," watches its leaders to see whether they uphold China's honor and deliver on their promises to make it a respected great power once again. Crises in East Asia could consequently become harder to control, and conflict spirals more likely to occur. China's rise also will require—and indeed already has—strategic recalculations by Japan, India, and Vietnam in particular, but also by Australia and Indonesia. China's claim to virtually all of the South China Sea, its assertiveness in demonstrating its claim to the Senkaku/Diaoyu islands controlled by Japan, its frequent and bold naval patrols there and in the disputed Spratly and Paracel (Nansha and Xisha) archipelagos in the South China Sea, and its proclamation of an Air Defense Identification Zone across a large part of the East China Sea have not gone unnoticed in East, South, and Southeast Asia—and certainly not in the United States. For its part, as the balance continues to shift and China's relative standing and power increase, Washington will be under pressure to increase its military presence in East Asia and to demonstrate to its allies the continuing dependence of its security guarantees and to China its credibility. This could set the stage for three classic, and dangerous, processes common in international politics: the security dilemma, conflict spirals, and misperception resulting from worst-case calculations.

Ethical Implications

Asia's new strategic environment will produce complicated ethical choices as well. Consider four examples. First, there will be tough decisions to make on human rights. How much should democratic countries push these principles? Should they relegate them to the periphery on the theory that, as the Asia-Pacific security environment becomes more conflict-prone, harping on rights will merely make matters worse, and that the non-democratic allies needed to play the Realpolitik game will be alienated as well? Or should democracies harness human rights as a source of soft power, playing to their advantage, while putting China, a non-democracy seeking to reshape the status quo, on the defensive? Second, if the trends I have mentioned above create increasing strategic discord, how will states in the region muster the trust and concord needed for serious common concerns as climate change, which will hurt some of Asia's poorest countries the most? The continuing disputes between upstream and downstream states within the context of water shortages created by increased demand and the consequent depletion of water tables belong in the same category. Third, given that avoiding a major war in the region is not only a strategic imperative but an ethical one as well, how can arms control and confidence-building measures (CSBMS), especially in such flashpoints as the Sino-Indian border, the Taiwan Straits, the East China Sea, and the South China Sea, be pursued amidst freewheeling political and military rivalry, which by its nature erodes trust and states' capacity to think in terms of cooperation to serve the common interest and to better address trans-national challenges?

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